SaaS Interviews with CEOs, Startups, Founders
1366 ACT! and SalesLogix Founders New Company Hits $1m in ARR
21 Apr 2019
Chapter 1: Who is Pat Sullivan and what is his background in software development?
Hello, everybody. My guest today is Pat Sullivan. He's been building software for over 30 years, currently working on a company called River, spelled R-Y-V-E-R.com. Along the way, he was named one of the 80 most influential people in sales and marketing history alongside Henry Ford, Walt Disney, Jack Welch, and Bill Gates by Sales and Marketing Management.
He's also twice named Ernst & Young's Entrepreneur of the Year for both ACT and SalesLogic Software.
Chapter 2: What led Pat Sullivan to leave ACT! and start SalesLogix?
Pat, are you ready to take us to the top? I am indeed. All right. So real quick, out of curiosity. So we've had both those guys on ACT and SalesLogic CEOs on.
Chapter 3: When did Pat Sullivan officially launch River and what does it do?
Were you the early CTO of both those companies? Well, I've never been a CTO. I don't consider myself a technology guy, although obviously you have to. But no, I was a CEO, founder of both of those companies. Oh, I see. Got it. Very good. When did you leave ACT? And in ACT's case, I was a co-founder with Mike Muni. in Dallas.
Chapter 4: How does River differentiate itself in the competitive project management space?
Yep. So when did when did you leave act? We sold it to Symantec in 1993. And then what after I started sales logics, and we went public, we actually bought it back from Symantec in 1999. So I own both Act and SalesLogic, Act twice. That's so funny. And when did you leave SalesLogic? SalesLogic got sold to Sage Software in 2002. Okay. And then, so was 2003 the founding year for River?
Chapter 5: What is the revenue model for River and how do they price their services?
No. Sometimes it feels like it was. But no, River didn't get started until about 2012. Okay. So there's 10 years you backpacked through Southeast Asia. What was Pat doing? Um... No, I did a couple of stints being CEO of other people's startups. And so this is actually River is actually my fifth venture backed startup where I raised money for all five of those companies.
I did try to retire twice and I found out I wasn't any good at it.
Chapter 6: What challenges has River faced in achieving growth and how do they address them?
It makes good sense. So you launch your own company in 2013. Tell us what River does and what's the revenue model. How do you make money? Yes, River is in the team communication project management space. Competing, since it's a combination, it competes in a way with Slack, with Trello, with Basecamp, products like that.
And Pat, so each of these guys, some of them have multi-billion dollar valuations. How do you wage wars on all these fronts? Well, in any space, particularly a new space, there's never just one winner. And there's always a way, if you really work at it, to differentiate between
Chapter 7: What is the current customer base and revenue status of River?
and find a place where they're not as strong as they seem. And we have done that with River. And so walk me through, you know, I don't want to go down every customer cohort, but on average, what's the customer pay for this? We have a $99 a month discount. Unlimited version, meaning unlimited everything, users, guests, storage. So it is a flat rate of $99.
We also have a $49 starter package, if you will, for 12 users or less. Okay. So what would you say the average, again, payment per month is? $49, $99, somewhere in between?
Chapter 8: What lessons has Pat Sullivan learned from his entrepreneurial journey?
Well, the average revenue per customer is just over $70. So most of the users tend to be the $99. We also, in the last few days, have introduced an enterprise version, which includes a single sign-on and a number of other enterprise features. And that... Is priced based upon having a conversation with a large company and determining the value of the product for them.
And and so you found it, obviously, in 2013. Have you raised capital? And if so, how much? Um, we have, uh, uh, we've raised actually $13 million. Um, and that, that has been over a space of the last, uh, six years. Yep. So you, I mean, you sold act to, to semantic, you know, then obviously you take sales logic public. I think that brought him 30 million bucks on day one.
People are going, wait, why is, why is a guy like Pat with his kind of history? Why does he need VC money? He should just, you know, give him the finger and do it himself. Why raise money at all?
You know, I learned long ago that entrepreneurs, the second time that they start a company after selling, they make the mistake of funding their own company because now that they've sold a company, they're really smart. And there's a validation that you have to go through in getting others to invest along with you. A wise man said you should never fund your own startup.
Um, just, you, you have to have that validation that, um, that you're onto something that other people believe along with you. Yep. That makes good sense. Uh, and also, you know, it, it puts the focus on your ability to convince other people to get behind what you're building, right? And they got to put money behind it. Absolutely. All right. Very good.
Um, 2013 launch date, uh, we're now four or five years later. What have you scaled to in terms of total customers? We have nearly a million users growing very, very fast in terms of number of customers. It's in the thousands. And like I say, growing very nicely. Can you give me a range there? So can we say between 1,000 and 10,000? Is that fair? Oh, I'd say between 1,000 and 2,000 at this point.
Okay, great. So between 1,000 and 2,000. So if we stay conservative there at 1,000 times that $70 price point, you guys are north of 70 grand per month right now. Is that accurate? Correct. Have you broke the million dollar AR mark yet? Very close. I was going to say, that's a big one. Now, you know, you've had a lot of big wins in your life.
Do you still drink champagne when you pass that million dollar rate? You know, the first million dollars is always the hardest to get. And yes, I definitely will pop the cork when that happens. That's good.
Now, Pat, I have to push you here a little bit because someone listening to those numbers are going to say, well, wait, Nathan, he's raised $13 million and it's taken him four or five years to hit a million-dollar run rate. That's actually not great growth. How would you respond to someone who might be thinking that? Well, a lot of people forget that this is hard.
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